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Underwater with 1st & 2nd mortgages
(MD)

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Answered (Verified) This post has 1 verified answer | 10 Replies | 7 Followers

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Mrdon posted on 2 Apr 2010 07:58 AM

In preparing to sell my home (unoccupied due to relocation) and finding that home's value is under combined total of 1st & 2nd mortages, need good, expert advice regarding short sale potential and/or strategy.  Am aware that presence of 2nd mortages create complications for short sales.  If I was able to retire the 2nd mortgage prior to placing on the market, would this create a better opportunity for a short sale with the 1st mortgage holder, or would the fact that I was able to pay off 2nd be held against me?  It is quite possible that even with just the 1st mortgage I am underwater.  Alternatively, would it be smarter to prepay the 1st mortgage an amount sufficient to get its balance lower and leave the short sale situation totally on the shoulders of the 21nd?  FYI, the 2nd is a home equity loan.

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Answered (Verified) darenb replied on 11 Apr 2010 06:55 PM
Verified by ian.douglas

This is a great question. Let me see if I can get some expert advice for you.

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Answered (Verified) darenb replied on 11 Apr 2010 06:55 PM
Verified by ian.douglas

This is a great question. Let me see if I can get some expert advice for you.

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Jim B replied on 7 May 2010 12:31 PM

If you will give me the details I think I could set up a free consultation with a real estate attorney, I work with.

Jim B

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Mrdon replied on 9 May 2010 08:04 AM

I am not comfortable publicly disclosing specific details, nor open to a discussion with someone who might not be licensed in my state.  If you+he/she care to offer an opinion about the way to proceed, this is the general framework:  As stated, property is not owner-occupied, i.e., it is vacant pending sale. First mortgage is approximately $350K; second (a home equity loan) is $75K.  Both loans are current with excellent payment record.  Property value is in the area of $400K, but market at $375K not out of question.  After sales commission, we could be looking at a seller obligation at closing of up to $70K.  Back to my original question: Is the payoff prior to sale of the second a smart move, or would this compromise any potential short-sale arrangement with the first?  Other ideas? 

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darenb replied on 10 May 2010 09:14 AM

Unfortunately there is not a clear-cut answer to your question. It depends and requires the coordination of many pieces of the sellers financial and legal situation. The questions to ask are:

Will the second give up their right to collect and release the their lien?

Will the buyer buy the property knowing the second will be a lien on the property?

Will the second call the loan all due and payable upon sale?

Will the first lien holder let some of the purchase price be used to pay off the second given answers to the above?

Does the state in which the seller live have a anti deficiency statute?

In other words you should consult with local counsel to review their loan documents to find out their legal obligations. And, your CPA to determine their best financial decision given their financial position. A local real estate agent from the RealtyTrac Agent Network may be able to put you in touch with a local real estate attorney who can guide you through these questions more specifically.

Disclaimer: The answers/questions given here are informational only and should not under any circumstances be intended as legal or financial advice. The person seeking these answers must obtain their own advice and counsel.

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DWM1019 replied on 12 Jul 2010 08:58 PM

Take a look at this web site www.MyHomeOwnerSuperHero.com it has tons of FREE information for people that are under water in their home or behind on their payments

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Answered (Not Verified) niemi replied on 6 Aug 2010 07:52 AM
Suggested by DWM1019
hello could someone please give us some sound information /guidance on short sales , refinancing , anything that would help , we have had to replace so many systems in this house we now are upside down in our bills. we have 4 children and am living in a 2 bedroom house that still has issues , issues that have exhausted our last cent , we nned to find a rent to own property in our area , that will accept multiple children and pets , please any help would be so appriciated . thank you GOD bless you niemi
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Housing Sage replied on 13 Aug 2010 07:33 AM
Hi Niemi: Like Mr. Don’s questions, your questions are largely legal in nature. Since I’m not an attorney, I can’t give you legal advice. But you should speak with a real estate attorney. Secondly, interest rates are at historic lows. So refinancing might be a solution. Interest rates on a 30-year fixed-rate loan is now at 4.44%, according to the Wall Street Journal. You could also consider looking into the RealtyTrac Agent Network. Search in your ZIP Code for a RealtyTrac Agent and contact that agent by e-mail or call them on the telephone. Finally, check out this website, YouWalkAway.com, which has a lot of interesting information. You have options. Find the solution to your problems.
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Answered (Not Verified) maynardN replied on 7 Mar 2012 01:44 AM
Suggested by maynardN
Many homeowners are trapped in a difficult position in which their mortgage balance is more than the actual value of their home. All of them wants get out of it in the most cost effective manner possible. This kind of problem may be the result of some events that people cannot control but the problem is that it is not easy to escape it. The ideal way to solve this problem is to continue paying the mortgage. The housing market has yet to fully recover from the turbulence of the past few years. Apart from record foreclosures, a massive number of home loans are now underwater, or the balance of the mortgage is over the home is worth. It is estimated that almost 23 percent of properties are underwater. Source for this article: More than one-fifth of homeowners have underwater mortgages
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Marietta GA Debby replied on 10 Mar 2012 06:40 AM

you should go in short sale on both.

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Hildred Smith replied on 6 Apr 2012 10:24 AM
Good questions! I know some professional real estate investors, maybe, I could seek for advice in answering your question. Anyway, if you need some legal guidance related to medical malpractices, please feel free to ask for help from Medical Malpractice lawyer Miami based.
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